OFAC settles with Wells Fargo for $30,000,000.00
Mergers are becoming more and more common in the credit union industry. However, credit unions should exercise caution when merging, as generally, when credit unions merge, they step into each other’s shoes. This means that a new credit union may be liable for violations of the old credit union(s). One recent example of this is with Wells Fargo, N.A. (Wells Fargo), its acquisition of Wachovia Bank (Wachovia), and Wachovia’s relationship with a European bank.
On March 30th, the Office of Foreign Asset Control (OFAC) released (the “Release”) an announcement that it had settled with Wells Fargo for $30,000,000 for three apparent program violations. According to OFAC, Wachovia, and subsequently Wells Fargo, provided software to a European bank that then used the software to “process trade finance transactions with U.S.-sanctioned jurisdictions and persons.”
What happened?
According to OFAC, the relationship with the European bank was originally initiated by Wachovia Bank (Wachovia). According to the Release, Wachovia provided software to the European bank that permitted the European bank to manage and process transactions on its own. The agreement between Wachovia and the European bank stated that it was the European bank’s responsibility to screen for OFAC issues and would not process transactions for OFAC sanctioned jurisdictions or entities. Eventually, Wachovia further created software that would allow the European bank to make transactions with OFAC sanctioned jurisdictions/entities.
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